Leadership Training Case Studies

Case Study 5:
Downsizing...or Not?

The organization is a family-owned computer business that has been in operation for 20 years. Since 1994, they grew steadily in their region in sales of computer hardware, custom software development, and in the provision of computer repair services because of their superb customer service and products. The family was well-known and respected in the community.

In recent months the business has experienced stronger competition resulting in a reduction in sales and a reduction in revenue. The need to reduce costs has led the owner to take the unfortunate step of laying off one employee. Five candidates have been selected as possible targets. Each possibility is profiled below. In no instance are any of these candidates the only employee in their department.

Research and Development Department – a computer engineer with a 4-year degree and 1.5 years of service. Performance appraisals = average to above average; has no completed projects yet but is making good progress on several; well-liked by coworkers; average technical abilities; moderate leadership potential.

Sales – a sales representative with an MBA and 2 years of service. Has high technical abilities and moderate leadership potential. Has high performance reviews, meets and exceeds sales goals. Is disorganized and often late for work. Spends time weekly playing golf “with clients.” When in the office, tends to socialize a little too much.

Service – assistant service manager, a high school graduate, and very good performer with 7 years’ seniority. Low leadership potential, steady and dependable worker, serves on company committees like customer appreciation committee and employee event committee. Keeps his service area neat and organized, is very customer-oriented, and rarely encounters something he cannot diagnose and fix.

Human Resources – HR assistant with 2-year degree and 4 years with company. Average to above average performer, leadership potential, easy-going and well-respected. Low in technical abilities. Works long hours. Has played important role in redesign of performance appraisal system.

Accounting – Accounting Manager with 4-year degree and 3.5 years of service. Has average appraisals, average technical ability and average leadership potential. Works long hours, frequently checks the work of others. Often has disagreements with others.

Rank-order your preferences for who should be laid off from most-expendable to least. You may wish to rate each candidate on education, seniority, performance, leadership potential, and other items of significance you may have noticed in the profiles.


Suggestions for use: have learners answer the case study individually. Then break them into small groups to discuss and come to some consensus. There is no definite “right” or “wrong” answer in this case study, as is true of many leadership decisions.

In this case, you may want tohave your group consider whether there is another way to cut costs instead of downsizing. Organizations that lay people off as their main strategy for controlling costs often find that trust is eroded.

If downsizing is considered a reasonable solution, the best a leader can do is to align with organizational priorities, develop reasonable arguments in regard to each candidate, discuss the possible solutions with others, and move ahead with a thoughtful decision (based on consensus when possible).

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